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tv   [untitled]    January 30, 2015 9:30am-10:01am PST

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are still on schedule for that and that's the extent of my questions. thank you. >> well, also the sewer replacement, i thought that we worked in tanned in tandem with the repaving of streets there's a notation here that says we're behind in our mileage because of the increase in the city's paving program. this is not happening the way i thought it was going to be? >> i think one of the challenges is when you actually do inspections of sewers typically you would like to go long stretches and what's challenging is that the paving program goes 2 blocks here and stops 2 blocks over here and 2 blocks over here and it's not really efficient so we try to coordinate and that's why we prioritize the paving but i think the most productive way
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is we're able to do long stretches so what we do do is plan these long stretches and for areas outside of that take away some some of the productivity and do 2 streets, side streets, and tell sunrise tell evise those and that's one of the reasons we're behind. >> is my conclusion correct that by the end of the 3-year
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program we'll be on target? >> i believe we're still planning to try to make up the time because we've, one of the other challenges was trying to get enough companies to help us because we're being very aggressive to televise our sewers and i think we have how many contractors? a couple of contractors on board to help us televise our sewers. >> okay. >> you want to add something, michael? >> one more thing. we actually have information coming from pg and e so we have terabytes of information on our sewers that we're going through now that they are out there with those independent contractors as part of that program. >> so actually when we capture that information, we'll be way ahead. >> yeah. >> okay. is there any public comment on communications? moving then to the report of the general manager. >> all right. so before we start i just wanted to hopefully you have a chance to read the press release yesterday from the mayor and the board of supervisors president london breed calling on san francisco public
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utilities commission to develop a clean energy program for san francisco. i just wanted you to know, you know i've been working with each one of the commissioners talking about, you know. credit cca and what some some of some of the vision that we had moving forward been talking to the mayor's 's office, the board of supervisors and lafco to talk about a path forward for clean power program the press release yesterday was pretty consistent with what we've been talking about the desires to do a community aggregation program in san francisco that's affordable and then the san francisco environmental goals and to create job opportunities so this friday will be the joint lafco meeting where we'll talk about our next steps but what's also important is that
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you know when we produce our business plans, we're going to talk about the cca program but also how the power enterprise and all their issues and how to move forward and so i just wanted to just share that with you and i'm sure we'll talk more about this on friday at the joint meeting at lafc o. any questions on that? >> i have a comment a comment. there's no question. so i wanted to make sure that people realize for for probably the duration of the conversation that was taking place even though we were really ambitious with our efforts there were some concerns related to the organizational chart presented originally that i actually endorsed because you can really see transparently what the workers are going to report and i want to go on to go on
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record thanking the mayor and all the people john avalos and all the people that did a lot of the heavy lifting and as you recall the san francisco labor's council representing all the unions in town had taken a position that wanted us to move forward with the jobs components specifically and we heard at the last meeting where everyone was here we heard about the affordability issue and i'm eager to get on with that conversation again and there's a lot of folks that deserve a a lot of credit and i feel comfortable on how quickly and aggressively we'll move it ford. forward. >> so the next item, mr. ritchie. >>
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>> excuse me, general manager for water again. if i can have the slides please and we can then go to the presentation. several of these charts are the same as we've seen before with updated numbers again hetch hetchy storage holding instead there and the water bank is increasing and that's due to snow melt running off so we're still in relatively good shape on storage compared to others but have a long way to go particularly in water bank storage our precipitation so far this year you can see up to close to medium early in the year decent december and you will see another slide later getting specific with what
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january was like in terms of precipitation and snow pack you can see it's reducing it's not a good sign. we still have time to rectify but it's still a cause for concern. on the deliveries front it's a new calendar year and started starting at the at the left-hand side of the page you will see the little green boxes in the lower left down there again the numbers are below the dashed black line representing an approximation of what we're trying to achieve in terms of demand so it's a good year and the blue is what 2014 was so if we have a green year looking like the blue year we'll basically achieve what we did last year and equates to about a 10 percent demand reduction
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those numbers well below the the 5-year average which is much higher than that and the chart, we're starting out ahead of the game. so again, our customers have continued to conserve well so on on the demand side things look relatively good. i showed you last presentation this slide, it looks almost identical, one difference here is that we've now gone through virtually all of january and you see a a big zero down there at the bottom of the january bar. that repeats itself with the local watersheds. the last part of december was dry and again,
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january has been completely dry we may get a little bit of precipitation in the bay area from this current front going through but don't expect a whole lot. this is a new chart here basically comparing the januarys over time and we have kept precipitation records at hetch hetchy since 1930 and there's some speculation we might get a tenth or two out of the system which would still be the lowest in our record there but not at zero and you can see 76 and 89 definite drought years and 2013 is on the low group here so when you put 2013 and 2014 together the januarys have not been good to us in the last couple of years. this is a slide i tend not to show at all because it's got lots of colors that might not be meaningful. the bottom
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picture is precipitation and the top one is the forecast for this week and red means a lot of water and green means a good chunk of water and blue means some water and you will see the map in the top box there shows the san francisco bay area and a little indentation no precipitation and you can see southern california getting some this week that's for the current week and next week shows california being green with a little bit of blue throughout and we could have a very good week of precipitation next week. don't know for sure. these have a habit of changing on you fairly rapidly so there's no indication but i wanted to show you there's certainly at least hope out there that the first part of february will prove to be different than january which is what happened last year and we'll keep you apprised. i gave
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you some numbers last time in what we're trying to achieve in terms of water available to san francisco this is water week actually take off the river either to feed water bank or for direct delivery to customers. that top line that would be a full system storage. if we got to 230, 000 that would mean that july 1st of this year would be where we were july 1st of 2014 so if we got close to 720 that would be very good news that would be potentially raising the 10 percent restriction. if we're we're at the 230 we're at the 230,000 feet range we're definitely in the 10 percent reduction at least for for the foreseeable future and less than that definitely need to consider further options. in
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2015 we're there in january with the blue box around the 7. we're at 7 thousand acre feet this year so obviously a long ways to go. we did not bad in february and march. hopefully that's the case again this year. that's basically a summary. december was decent and january was horrible and february and march will have to be played out. we need a good year to get out of the hole and one thing to note the state water resources control board earlier this month sent out a notice indicating that the potential for curtailment of diversions is a possibility that they will be ready to take up throughout the year
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depending on how it goes forward and personally if february is a dry month i i suspect we'll see a lot of activity out of sacramento and it's very important to us so we'll be watching that one very closely but other things could happen as well and i'd be happy to answer any questions. . >> in case you guessed a while back that since 1900 if we have very heavy december rainfall we will have above average in february, march and april so you heard it from me. [laughter]. >> i'll go go to the bank on that one. [laughter]. >> yeah, i would recommend that if you were thinking about putting a bet [laughter] that you keep your money close. >> any questions?
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>> and then i would like to get your input on the mid-cycle budget priorities and we have matt coming up to give a presentation. >> may i have the projector please? >> good afternoon. i'm chief financial officer. the second year the budget cycle is closed the commission has the ability to make some adjustments for priorities that it deems critical in nature. today i'll provide this to you and when we
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were last before you with this topic the annual budgets are here before you for reference. at this time if there are no changes, no action is required on your part during the mid-cycle budget process unless you choose to. between year 1 and 2 the adopted budget remained relatively flat. the the 2-year budget was approved in accordance with the commission and quality of services and planning for the future and commitment and
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personnel. >> they are further clarified through key policy initiatives of the commission. the matrix here highlights next years approved budget of 988.8 million . again, no action is required by the commission if there are no changes to the budget, however, those adjustments can be made to account for any key policy changes that you feel are important or new emerging priorities. this is a list of considerations that you may find helpful. these areas are
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other policies within our department. . charles pearl, our deputy chief financial officer is joining us today. >> thanks. good afternoon commissioners and again we thought we'd pause here in talking about your priorities for next year just to take a brief look at how the current year is going. again, we're talking about next fiscal year fiscal 16, the second year of our 2-year budget cycle and the slide before this you have 2 considerations that you felt were important related to the finances and that being
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affordability and revenue generation and sufficiency so we thought it would be helpful today to share with you a preview of the q 2 update which we'll give you at your next meeting in february and this is preparing for next years budget. the good news is that our customers actually have responded to requests to voluntarily cut back on water use but means we need to manage around the revenue variances this creates and you see this in more detail when we come back and give you the q 2 sales information at your next meeting but this chart here gives you a preview of that and in in particular i'd like to bring your attention to to what's circled. a current year variance of approximately 41 $41 million in the can you $41 million in the current year and
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wastewater at 23 at $23 million. we have approximately 8 $8 million to cover part of this shortfall and on the right side of this chart you will see we have sufficient fund balance to balance things out which is a good thing but over the near term as you recall you have approved retail rate changes for the water and wastewater enterprise for the next 4 years through fiscal 18 and we project those will be sufficient for our needs even at this lower reduced consumption levels if things hold as we currently project them. also a reminder that i want to point out in this 41 $41 million for the water enterprise about 25 million of that is related to our wholesale customers and we do reset those rates each year and
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we'll recover that portion that we'll bring to you in may of this year so we have lots of things in the tool belt we're working on and will share that with you and talk of things in a broader sense but i wanted to share with you a little bit of how the current year is looking as this has come up over the last few meetings and with that i'm happy to take any questions and pass the rest of the presentation back to miss hong. >> thank you charles. as we begin our preparations for the next 2 years budget cycle we highlight one commission policy a month and provide further
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knowledge of how our organization monitor monitor and measures for each of the policies. before we schedule these discussions we'd like to ask the commission whether these are the correct policy topics for discussion and if yes, what delivery format would you like to present this information to you? and it could be in the form of regular progress reports or any format you would want. >> thank you for putting that together. part of the impet u.s. for this came from discussions we had a while back and one thing you can do is see how you are doing and really spend more time about where you are trying to go and whether you are getting there
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or not than worrying about balancing the budget in 1 year and we have a series of policies that this commission has adopted the presumption is that will become the work of the general manager and staff so part of the reason for going through this is to say okay let's go through those policies one at a time see how we're doing and if we're not doing some elements of that is that because we've changed our mind or is there an obstruction of some kind that we need more money for or haven't got around to it yet so have that kind of discussion and out of that have that informed general manager and staff as they put together the budget for the following 2 years so this is responsive to
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that and i very much appreciate you putting it together. one question i had, the may event, what do you anticipate there? that's not the name of a policy that i recognize so i'm not sure what you had in mind there. >> . >> that could be in the form of the budging process we can talk about how the budgets are put together at that time we might want to very visit the mission of the commission here and whether there may be some changes that you may see coming up while you are beginning the new fiscal year you may look forward and say what's coming around the corner and you will probably hear some of them in the next meeting as charles had mentioned so those are things you might want to talk about and how would we measure against that performance and that that might be a time to go over the existing process and also thinking about what
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you might want to incorporate and planning begins in october or november. >> actually, i think this year is really challenging because in a 2-year budget the off year is the year you kind of see what you are doing as you mentioned before but this year we haven't sold as much water because people are conserving actually more than we anticipated so with the 41 the $41 million shortfall we have to relook at you know what we're doing and the other thing that we are probably going to spend a lot of time talking to the commission about is that when you look outside, there are a lot of construction going on a lot of hook ups to our sewer and water system and one of the things i'm concerned about a lot of developers are looking at us because our time of hooking these water, their water up, it's actually because of limited resources, it's
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taking us longer and so that's some that's some of the things that we want to talk about and the other thing the watershed assessment there's no funding for that but with all these new developments in, they are required to to do that so we just need to really talk about, you know, not only the policies but some some of the practices that are actually going on so the commission can see what the challenges are because what we may end up doing is asking for more resources especially the areas where we cover the funding like the hook ups to water we actually charge the newcomers for the hook ups so to have those discussions as we formulate what the need is to address those issues. >> one of the things that i've been thinking about lately is how to deal with the deficiencies people have when
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people do the right thing and conserve more which is a great thing for the resource but gives us some financial problems part of that is the right setting problem and we're taking a look at the rate structures i'd like to take an aggressive look at rate structures and talked a little bit at the last meeting trying to change the paradigm the more you buy the more you pay and changing it to something like we'll give you all the water you need and at the same time we'll you will conserve more than you think you do and i think there's some things we can do there the industry talked about water budgets. they are intr u.s. ive and hard to implement but can be done
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on an opt in basis so for people where per gallon charge doesn't make sense you can have a fixed cost for everything within that budget and if you go over that then there's a per gallon charge but there's things we can look at that are very different from the the way we set rates today but the reality that we want people to use less and less water and to resolve the policy conflicts there. i don't know whether it's within this structure or some other discussions, but i would like us to address that, you know, it's not going to hit rates this year but the following year we should be thinking about that. >> and actually that's a great topic because not only on our water side, it also impacts the wastewater side and so what we've been looking at and we started look at, is if you look at our wastewater what really
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impacts our wastewater is storm water because our systems are sized for storm water so property that has the most storm water may not have a bathroom attached to it or may not even be our customers so i think we're really interested in looking at the rate structure not only on the water side but the wastewater side and i've been talking to a lot of general managers from other agencies out there and they are faced with the same dilemma and one of the things they are talking about are fixed costs and you can identify what your fixed cost is and you have some other costs associated which can tie into conservation or something something like that so your comments i think are well received and that's something we'd like to engage in in because once we do the
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investigation and do the outreach, it's going to be, you know, a couple of years before we implement anything. >> chances are it would look quite a bit different than the current rate. >> oh yes. >> and that will have a lot of people interested. >> yes. >> but i think and one thing i encourage people -- there has been kind of the accepted wisdom in the water industry is you have to have per gallon charges as a best management practice there's considerable discussion about the short comings of that kind of policy and other forms of rate structures that can have actually greater incentive for conservation that don't look like that at all so i would just encourage the staff as you look at that to not let that be a barrier. one scheme that could fit in there is you know
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that when you conserve water you are going to sell less and make less money so there's going to be a revenue shortfall so as as soon as you approve a conservation program whether you do anything about it or not, you know you are going to have to raise rates and at the last meeting we showed over the the last decade in order to keep revenues the same we had to increase rates 25 percent just to continue to meet the pay roll and one way you could fund that is with a conservation charge so if you want to reduce consumption by 10 percent, you put a charge on that would compensate for the 10 percent and the first year you are not going to make that you will have extra money and can spend that on conservation money so spare money.
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